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Upsurge in Oil Prices Upon Falling US Fuel Inventories

Oil prices on Wednesday, 12th July 2017 extended gains from the previous day as the US government cut its crude production outlook for next year and as fuel inventories plunged.

Brent crude futures rose 65 cents, or 1.4 percent to $48.17 per barrel by 0155 GMT, while U.S. West Texas Intermediate (WTI) crude futures were at $45.77 per barrel, up 73 cents, or 1.6 percent. Both settled about 1.4 percent higher on Tuesday.

U.S. crude oil inventories fell by 8.1 million barrels in the week to July 7 to 495.6 million, according to the American Petroleum Institute (API), in an indicator that a long-standing fuel supply overhang is starting to draw down.

The U.S. Energy Information Administration said late on Tuesday that it expected 2018 crude oil output to rise to 9.9 million barrels per day (bpd) from 9.3 million bpd this year, a 570,000 bpd increase. This was down from last month’s forecast 680,000 bpd year-over-year increase.

Despite the slight downward revision, US production is still set to break the 9.61 million bpd record from June 2015.